RPVAR: GOODBYE ZONAL VALUES

Here's a quick explanation of the real property valuation and assessment reform (RPVAR). This bill, if and when signed into law, will replace BIR's zonal values (ZVs).

BACKGROUND:

+ Currently, 23 gov't agencies (e.g., LGU vs. BIR vs. DAR) prepare their own RE valuations, creating confusion about which should be used. Some of these agencies are ill-equipped to even do valuation, lacking the technical skills to do so.

+ So, the Dept. of Finance (DOF) passed a bill to streamline the valuation process and require all agencies to use the values. The DOF will provide the technical expertise in valuations.

+ As of May 27, the bill is awaiting the President's signature.

BENEFITS:

+ With its implementation, RPVAR aims to expedite infrastructure projects by providing a standardized basis for compensating landowners in cases of expropriation.

+ This will also allow LGUs to update their assessment of market values (tax dec market value) and increase real property tax (RPT) collections.

+ Property values determined by the DOF will be SHARED to the public–for a fee (or subscription system). Pricing properties will become much easier.

HOW WILL THE NEW VALUES BE DETERMINED?

+ The DOF will mass appraise ALL properties in the country. A consultative committee composed of reps from various agencies (BIR, BSP, LRA, etc.) and the private sector will review the numbers.

WILL RPT INCREASE?

+ Yes. Actually, some LGUs don't support RPVAR because they don't want RPT to increase because it's an unpopular move among constituents.

+ The DOF emphasizes that increases in RPT from RPVAR may be mitigated by the LGUs. LGUs could revise the "Assessment Level" or the "Tax Rate." In fact, they're suggesting limiting the RPT increase to just +6% in the first year of implementation. After, LGUs are free to adjust it to whatever amount.

WHAT WILL HAPPEN TO ZVs?

+ Existing ZVs will be replaced by the new valuations determined by RPVAR. Interestingly, RPVAR valuations may even be lower than existing ZVs.

WHEN WILL RPVAR BE IMPLEMENTED?

+ Assuming the President signs the bill in June, the new assessments are estimated to be effective in 2029.